Marketing Fraud of the Decade: How Much Is the ‘Orange’ Brand Really Worth?

A suggestion for Partner: Maybe exploit this crisis and consider breaking away from this brand.

Bloomberg

The declaration by the CEO of Orange that he would prefer to take the brand away from the Israeli telecommunications company Partner will keep the boycott Israel industry busy for the next few days.

But maybe we should look at the economic issue at stake. As published, Orange has no way of implementing its CEO’s warning, because the company is tied into a long-term agreement. But what is more important – and this Partner also wants you to forget – is that the value of the Orange brand in Israel is extremely dubious.

A reminder: In the decade leading up to 2012 three cellular companies in Israel invested billions of shekels in building their brands. They poured this money into commercials featuring puppies frolicking in the park or soldiers returning home on leave, and of course on their enormous marketing departments. The company managers and deputy marketing and advertising directors were constantly busy with image wars over which is the bigger and more successful.

Those who didn’t participate in the celebrations were, of course, the consumers, who paid crazy prices and received terrible service. Hundreds of thousands of them spent many hours during this decade in conversations with customer service, where thousands of students worked in the fraud industry – charging people for services they did not ask for.

Then the competition arrived. Michael Golan set a price of 99 shekels a month, which later dropped to 50 shekels. The cellular companies and their pleasure-pumped managers, who had become used to the cartel life, were in shock. Their advertising people didn’t understand what was happening. Within a few months it became apparent that the billions they had pumped into building their brands were the marketing fraud of the decade. The public hated the cellular companies and were unwilling to pay for the brand when an anonymous company offered a similar service, with a marketing budget less than 1% of what the cartel had burned.

For the first year the three cellular companies were in partial denial. They were incapable of admitting or understanding that they had no real brands. The public doesn’t see them, and was only tied to them because the feeble regulator prevented any competition for a decade. Once the companies had recovered, they were forced to match Golan’s prices almost exactly. In doing that, they effectively admitted that the value of their brands is negligible compared with the billions invested in them.

One way to measure the value of a brand is by asking how much it pushes upward the request curve for a service or product of the company. The case of Orange-Partner-Cellcom proves that the brand’s value is insignificant.

Partner will surely have excellent legal grounds for suing the French company if it doesn’t quickly retract its announcement. But it won’t be able to appear in court and claim that its brand is worth billions of shekels, or even thousands of millions of shekels.

Here’s a suggestion for Partner: Maybe take advantage of this crisis and consider breaking away from this brand and focus on the cut-price “012 Smile” brand instead. Maybe this way your customers will forget the days when you steamrolled and cheated them. This may be far-fetched, the provocative claim whose aim is to spark consideration of the value of cartel brands, as there is still great value in familiarity with a brand in which huge amounts have been invested - but it’s not an altogether unrealistic idea.